Govt says laundering reforms will not be costly
The Federal Government has reassured the industry that its shake-up of the Financial Transaction Reports Act 1988 (FTRA), to be drafted this week, will not send the funds management industry spiralling into bankruptcy by imposing crippling client identification costs onto it.
According to the Minister for Justice and Customs Senator Christopher Ellison, who is steering the reforms, the proposed anti-money laundering amendments will not force unbearable costs on product providers in the form of having to identify clients, however, he says the funds management industry will have to improve its record keeping.
“Fund managers will have to undertake a process of ‘customer due diligence’ requiring the identification of members/customers, and then verify that identity information. Fund managers will not be required to disclose this information, however, they will be required to maintain customer due diligence records,” a spokesperson for Senator Ellison says.
If investors engage in transactions involving more than $10,000, or transactions involving funds which the manager reasonably suspects are the proceeds of criminal activity or terrorist financing, the manager will be required to report details of these transactions, including the names of their members, to the anti-money laundering regulator, the spokesperson adds.
Despite this, the Minister’s office has assured the financial services industry not to expect a burdensome administrative change.
“[Beyond this], the fund manager will not be required to disclose any other details of their client relationships.”
Last week, Money Management reported the industry may have to identify more than nine million investors due to the reforms of FTRA, which follow the Government’s call for submissions from the financial services sector earlier this year in an issues paper.
The issues paper defined the purpose of the FTRA as being “to discourage financially motivated criminals and to provide financial intelligence to revenue and law enforcement agencies”.
The FTRA has penalties in place for non-compliance with its reporting requirements or for provision of false or incomplete information.
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